Key highlights:

• The Fed lifted the fed funds rate at its June meeting by 75bps and flagged further increases which should see it move above its estimated neutral level.
• We expect a peak fed funds rate target range of 3.25%-3.50% in early 2023.
• Given the move to restrictive monetary policy and other global economic headwinds (commodity price shock, China disruptions due to COVID), we expect growth to slow to a crawl by around mid-2023. As a result, it is likely that the US will go into recession next year.

Find out more in NAB’s US update (June 2022)